Income Taxes

6 Months Ended

Jun. 30, 2019

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes:

Income tax provisions for jurisdictions outside the United States of America, as well as state and local income tax provisions, were determined on a separate company basis, and the related assets and liabilities were recorded in PMI’s condensed consolidated balance sheets.

PMI’s effective tax rates for the six months and three months ended June 30, 2019 were 21.1% and 20.3%, respectively. PMI’s effective tax rates for the six months and three months ended June 30, 2018 were 23.5% and 22.1%, respectively. The effective tax rate for the six months ended June 30, 2019 was favorably impacted by further clarifications related to the Tax Cuts and Jobs

Act, the reversal of a deferred tax liability on the unremitted earnings of PMI's Canadian subsidiary, RBH ($49 million), and a reduction in estimated U.S. federal income tax on dividend repatriation for the years 2015-2018 ($67 million). PMI estimates that its full-year 2019 effective tax rate will be approximately 23%, excluding the discrete tax events mentioned above and the 2019 loss on deconsolidation of RBH, which is a significant unusual or infrequently occurring item. For further details, see Note 20. Deconsolidation of RBH. Changes in currency exchange rates, earnings mix by taxing jurisdiction or future regulatory developments may have an impact on the effective tax rates, which PMI monitors each quarter. Significant judgment is required in determining income tax provisions and in evaluating tax positions.

PMI is regularly examined by tax authorities around the world and is currently under examination in a number of jurisdictions. The U.S. federal statute of limitations remains open for the years 2015 and onward. Foreign and U.S. state jurisdictions have statutes of limitations generally ranging from three to five years.

It is reasonably possible that within the next 12 months certain tax examinations will close, which could result in a change in unrecognized tax benefits along with related interest and penalties. An estimate of any possible change cannot be made at this time.